Michael O'Keeffe strikes Champion Iron merger deal
SARAH-JANE TASKER THE AUSTRALIAN DECEMBER 07, 2013 12:00AM
MINING entrepreneur Michael O'Keeffe, who sold his previous coal venture to Rio Tinto for $4 billion, has turned his attention to iron ore with a merger of Australian-listed Mamba Minerals and Canada's Champion Iron Mines.
O'Keeffe, who chairs Mamba, said yesterday he was "over the moon" and had not seen an opportunity like this for a long time.
He bought a stake in Mamba last year and this year took the decision to "get in" and work with the company.
"The company didn't have any real structure or management to it . . . you don't get half pregnant, you either get in and work with it or you don't, so in August I decided I'd have a go and see if we could make something of the assets," he said.
Three months later and he has announced a merger with Champion Iron Mines that will see Champion's shareholders receive 11 Mamba shares for every 15 shares they hold.
The deal saw Mamba's shares soar, closing yesterday 14.5 per cent higher at 63c.
The newly merged company, to be named Champion Iron, will remain listed on the Australian exchange.
O'Keeffe's deal skills are well known, having sold his Mozambique coking coal play, Riversdale Mining, to Rio in 2011 for $4bn, a venture that later caused pain for former Rio boss Tom Albanese when Albanese was forced to announce a $3bn writedown on the asset.
The mining veteran also heads Riversdale Resources, or Riversdale mark II, which is focused on developing coal projects in Alaska and Canada.
While it is coal he has made his fortune in, it's iron ore that has his attention now.
He said it had become obvious that there were a lot of Chinese companies in Canada's iron ore space, looking for an alternative supply from the Pilbara in Western Australia.
O'Keeffe said iron ore could be delivered to China from Champion's Fire Lake project for about $C45 a tonne, about the same cost as that coming out of the Pilbara.
He also stressed that apart from Mamba, there were no companies listed on the ASX that have assets in Canada's Labrador Trough.
Ocean Equities analyst Adam Lucas said that in the mining community there was only a small number of people who had the ability to execute successful mining developments.
He said O'Keeffe, although not well known in Canada, was one such person who had the ability to navigate the Fire Lake project through the next phases of development.
A pre-condition of the deal is for Mamba to raise $10 million to upgrade a pre-feasibility study to a bankable feasibility study for the Fire Lake project.
Lucas said completion of the fundraising would illustrate to the market the immediate institutional support for O'Keeffe and highlight the quality of the Fire Lake project.
MAB Price at posting:
63.0¢ Sentiment: Buy Disclosure: Not Held
